3 Sell-Rated Dividend Stocks: USAC, KNOP, STB

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Sell."

USA Compression Partners, LP provides natural gas compression services under term contracts with customers in the oil and gas industry in the United States. The company has a P/E ratio of 40.79.

The average volume for USA Compression Partners has been 108,400 shares per day over the past 30 days. USA Compression Partners has a market cap of $664.1 million and is part of the energy industry. Shares are down 20.6% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates USA Compression Partners as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

USAC has underperformed the S&P 500 Index, declining 16.92% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

The gross profit margin for USA COMPRESSION PRTNRS LP is rather high; currently it is at 65.94%. Regardless of USAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.78% trails the industry average.

USA COMPRESSION PRTNRS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, USA COMPRESSION PRTNRS LP increased its bottom line by earning $0.32 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.56 versus $0.32).

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 192.8% when compared to the same quarter one year prior, rising from $1.71 million to $5.01 million.

The revenue growth greatly exceeded the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 48.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. As of April 14, 2014, it had a fleet of five shuttle tankers. The company has a P/E ratio of 21.64.

The average volume for KNOT Offshore Partners has been 80,200 shares per day over the past 30 days. KNOT Offshore Partners has a market cap of $302.1 million and is part of the transportation industry. Shares are down 22.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates KNOT Offshore Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, KNOP maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.

KNOP has underperformed the S&P 500 Index, declining 13.70% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNOT OFFSHORE PRTNRS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

The gross profit margin for KNOT OFFSHORE PRTNRS LP is currently very high, coming in at 77.81%. Regardless of KNOP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KNOP's net profit margin of 36.68% significantly outperformed against the industry.

KNOT OFFSHORE PRTNRS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.37 versus $0.87).

Student Transportation Inc. provides school bus transportation services in the United States and Canada. It operates through Transportation, and Oil and Gas segments. The company offers contracted, managed, special needs transportation, direct-to-parent, and charter services. The company has a P/E ratio of 318.50.

The average volume for Student Transportation has been 87,800 shares per day over the past 30 days. Student Transportation has a market cap of $529.8 million and is part of the transportation industry. Shares are up 2.9% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Student Transportation as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, poor profit margins, feeble growth in its earnings per share and generally high debt management risk.

Highlights from the ratings report include:

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Road & Rail industry and the overall market, STUDENT TRANSPORTATION INC's return on equity significantly trails that of both the industry average and the S&P 500.

Net operating cash flow has decreased to -$23.24 million or 10.11% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

The gross profit margin for STUDENT TRANSPORTATION INC is currently extremely low, coming in at 9.99%. Regardless of STB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, STB's net profit margin of -9.88% significantly underperformed when compared to the industry average.

STUDENT TRANSPORTATION INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, STUDENT TRANSPORTATION INC reported lower earnings of $0.02 versus $0.04 in the prior year.

In its most recent trading session, STB has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.